Ep 160: How to Spend Your Money and Truly Make Yourself Happy

MichaelCognition, Intelligence and Language, Emotion2 Comments

Why aren’t rich people happier than those with less money?

We think money will bring happiness, but research in the area of positive psychology has consistently found that having more money does NOT make us happier. Find out how to spend your money the right way so that it really can bring happiness into your life.

Affective Forecasting Error

The reason we don’t spend our money the right way is what Dan Gilbert has described as an “affective forecasting” error that our “mental simulation mechanism” makes. That is, when we think about the future we aren’t usually right about what will make us happy because we don’t think about two things:

    1. Adaptation – we adapt rather quickly to the things we buy (TVs, computer, etc.). The initial excitement wears off much quicker than we anticipate it will.
    2. Context – we don’t pay attention to the context of our lives at that future state. In other words, we focus on that new car or that new TV, but we don’t think about the bills that go along with it.

Resources on Money and Happiness

    • The fragile American Dream: Insights from the economics of happiness
    • Dunn, E. W., Gilbert D. T., & Wilson T. D. (2011).  If money doesn’t make you happy then you probably aren’t spending it right. Journal of Consumer Psychology. 21(2), 115-125.
    • Van Boven, L., & Gilovich, T. (2003). To do or to have: That is the question. Journal of Personality and Social Psychology, 85, 1193-1202.
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2 Comments on “Ep 160: How to Spend Your Money and Truly Make Yourself Happy”

  1. I think it is 100 percent correct that more money doesnot mean more happiness. It is a perception that more money will result in more happiness. Our Holy Prophet Muhammad (pbuh) advised Muslims to live a normal(saadgi wali) life. We should abondon Luxury. And try to pay Zakat from the money that Allah has given us. Zakat will help poor people. May Allah guide Muslims to abondon Luxurious life, and try to live a happy life with little means that Allah has given us.
    Mumtaz Allahbux

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